The Lopezes in business
The share price of First Philippine Holdings has dropped lately to record 12-month lows. This values the company at P34.6 billion, down 17 percent from its 12-month peak of P41.56 billion in February 2017.
The wealth of the Lopez family, which owns 50 percent of FPH, has declined by P3.6 billion, to P17.58 billion or $345 billion.
A P3.6-billion nominal loss is small change. The Lopez family bought the Energy Development Corp. from the government for a whopping $1.5 billion in 2007, making FPH the world’s single largest producer of geothermal energy.
Other listed Lopez companies are also in the doldrums. The share price of their family holding company, Lopez Holdings (formerly Benpres) has fallen from its peak of P8.05 per share in January 2017 to P5.80 as of yesterday (Jan. 9, 2018), a drop of 28 percent to value the company at only P26.6 billion. This is a loss of P10 billion in wealth. Lopez Holdings owns 46 percent of FPH and 56 percent in economic interest in ABS-CBN Corp.
ABS-CBN itself has seen better days. Its share price is down from its January 2017 high of P48.95 a share (or P41.64 billion in market cap) by 27 percent to P29.69 billion, a loss of P11.95 billion in wealth.
President Duterte doesn’t like the Lopezes (not related to me). In their heyday, the Lopez family could make or unmake a president and could also plot to kill one, if you believe Ferdinand Marcos before 1972.
The Lopezes in business —media, renewable energy, power generation—is a story of resilience and business savvy (though they bet wrongly against Duterte).
FPH has refinanced for $544 million FPH’s Sta. Rita refinery and acquired for $360 million the assets of British Gas in 2012. In August 2017, FPH sold 31.7 percent of EDC for $1.3 billion to Philippines Renewable Energy Holdings Corp.
PREHC is a consortium of investors whose funds are managed by Macquarie Infrastructure and Real Assets, and Arran Investment Pte Ltd, an affiliate of GIC Pte Ltd. MIRA and GIC are long-term investors with a track record in both global infrastructure and renewable energy. They own and operate a combined installed capacity of over 11,000MW globally.
David Luboff, MIRA senior managing director, says of their acquisitions: “As a world-leader in the geothermal energy industry, EDC is an important supplier of clean and sustainable power to the Philippines.”
The Lopez business empire dates back to the 19th century. But today’s Lopez empire is reckoned to have started big in 1961, 15 years after Independence, when Meralco Securities Corp. was established by the patriarch Eugenio Lopez Sr. to buy giant Manila Electric Co. for $66.286 million from its American owners.
“It was the single largest corporate buyout in the history of Philippine business,” wrote FPH Chair Emeritus Oscar M. Lopez later.
After 26 years as CEO, Oscar, 86, turned over management of the Lopez empire to second son, Federico “Piki” Lopez, 55, on March 31, 2010.
Piki has double major degrees, cum laude, in Economics and International Relations, from the University of Pennsylvania in 1983. Piki’s dream is to launch another Golden Age for the Lopez businesses.
There is a slight problem, however: Duterte, arguably the most popular Philippine president in the past 50 years and the second most powerful president since Marcos. He has repeatedly denounced ABS-CBN for alleged “bias” and fraud. The Lopezes are used to the slings and arrows of outrageous politics, though.
From distribution of electricity using “dirty” energy (that was Meralco) to generation of “clean, green, and sustainable” power (that is EDC, now First Gen which has installed capacity of 3,468 megawatts in various energy assets, 21.4 percent of the Philippines’ total generation capacity).
First Gen is a leading power producer in the Philippines that primarily utilizes clean and indigenous fuels such as natural gas, geothermal energy from steam, hydro-electric, wind, and solar power.
EDC is the largest vertically-integrated geothermal company in the world. With 1,471MW of clean and renewable power assets under its portfolio, it is also the largest pure-play renewable energy company in the Philippines.
In 1966, FPH began businesses to support Meralco—two pipelines in 1967 to feed bunker and crude to Meralco and pipe refined petroleum products from Shell and Caltex in Batangas to Manila, a transformer plant called Philec in 1970, a lubricating oil plant called Philippine Petroleum Corp., an electricity engineering company called PECCO in 1969, and a computer information system to print Meralco bills.
This “Golden Age” ended when Marcos declared martial law, forcing a 14-year exile for the Lopez family. FPH and Meralco fell into the hands of Kokoy Romualdez.
The patriarch Eugenio Lopez Sr. died in the US only July 6, 1975. His son, Eugenio “Geny” Lopez Jr., younger brother of Oscar escaped from his Fort Bonifacio prison on Sept. 30, 1977.
Two days after People Power on Feb. 28, 1986, the Lopezes got back Meralco, PCIBank, First Holdings, and of course, ABS-CBN.
Piki Lopez defines the values that have carried the Lopez empire through the decades: pioneering entrepreneurial spirit, business excellence, unity, nationalism, integrity (tell that to Duterte), employee welfare and wellness, and social justice.
Says Piki with pride: ”There have been many instances in our history when other principles mattered much more than the drive to make profit.” “That fact will be true of us heading into the future as well.”